Many top banks have leaped headlong into hedge fund servicing businesses, most notably into prime brokerage and fund administration. JPMorgan Chase & Co. may now be pushing the envelope even further.
JPMorgan Chase, which last December entered the hedge fund business directly by taking a majority interest in the New York-based Highbridge Capital Management, reached an agreement last month to acquire Neovest Holdings, which develops and provides advanced trading technologies to large hedge fund giants.
The deal is not just about hedge funds. JPMorgan Chase lacked what Emily Portney, a managing director, termed “a front-end offering” to complement its content services to investors.
With Neovest in tow, JPMorgan Chase will own a vehicle to deliver such staples as algorithmic trading, trade optimization models, and pre- and post-trade analytics directly to clients “faster and more seamlessly,” in Ms. Portney’s words.
Still, the rapid growth in the hedge fund sector was “obviously a factor” in JPMorgan Chase’s choice of Neovest, Ms. Portney said. Neovest offers the direct market access (DMA) and multi-asset-class execution capabilities that are in high demand among hedge funds and other deployers of high-frequency trading strategies.
